How host-country firms’ information transparency affects MNEs’ joint venture entry mode of OFDI: evidence from Chinese listed manufacturing firms

Abstract

Purpose Information transparency is an important factor in enhancing trust and promoting interfirm cooperation. By combining transaction cost theory and institutional theory, this study aims to examines whether host-country firms’ information transparency prompt multinational enterprises’ (MNEs) to choose the joint venture entry mode for outward foreign direct investment (OFDI). Design/methodology/approach Using Heckman two-stage estimation method, this study examines Chinese listed manufacturing firms for the period 2014–2019. Findings The findings indicate that the higher the information transparency of host-country firms, the higher the possibility of MNEs choosing the joint venture entry mode for OFDI. This study further finds that the positive relationship between host country firms’ information transparency and the possibility of choosing the joint venture entry mode is enhanced by institutional distance, but weakened by MNEs’ host-country experience. Originality/value How to choose the appropriate entry mode of OFDI in the internationalization strategy is an important issue for MNEs to consider. As the postpandemic world is characterized by increased global risks, decoupling of economies, disruption of global value chains and the retreat of globalization (Contractor and Cantwell, 2022), how to further strengthen cooperation, reduce the cost and risk of MNEs and truly realize common construction and sharing is one of the hot issues in both practice and research.